How Does a Mortgage Work for a £100m Luxury Mansion?

mortgage £100m

Islay Robinson

Property tycoon Christian Candy recently sold his mansion overlooking Regent’s Park in London. The unnamed buyer is said to have paid a princely £104million for the pad, in what is reportedly the first mega deal to have taken place at the top-end of London’s property market since the UK went into lockdown in March. 

The home itself is the stuff of dreams, with 14 bedrooms spread over five floors, complete with swimming pool, gym and wine cellar. 

Spending tens of millions of pounds on a family home may seem a lavish purchase, but property is a relatively sound investment for billionaires and high net worth individuals. Hugh Wade-Jones, managing director of Enness Global, said: “The central thesis here, is that the financial cycle of prime real estate works like a boomerang – whatever you put in, will likely to be returned, and what is more, is that the figures will be surplus to the original figure with the accumulation of time.

“In my experience super-prime properties attract discerning clientele.”

A super prime home is typically classed as property worth £10m or higher and can appeal to overseas investors, celebrities and the top brass of business. It may be somewhat to surprising to learn these buyers take out mortgages to secure their dream home, rather than using their own considerable means to purchase a property outright.   

There are many factors behind the motivation for a super prime mortgage. Wealth at these levels is usually multifaceted, perhaps tied-up in business ventures or not yet realised. And, frankly, with interest rates at ultra-low levels, it can be of little sense to plough cash into an illiquid asset when it could be working harder elsewhere.   

Hugh explains: “The highly affluent can earn higher returns on their capital since their wealth gives them greater tolerance for illiquidity and risk.”

A loan at these levels requires a tailored approach and isn’t something high street lenders can cater for. Private banks or high net worth individuals could provide the capital – or even a combination of the two.  

Most of us will never reach the lofty heights of wealth held by the mystery buyer of Christian Candy’s luxury abode, but we can understand how a mortgage might have facilitated the transaction. At a purchase price of £104million, the buyer would have needed a hefty deposit of £36.4million to take a loan at 65 per cent loan to value (LTV).

For this calibre of buyer, however, wealth is complex and typically made up of different investments alongside income from various sources. It’s not unusual for a mortgage deal to involve a number of different strands, with part of the loan lent against assets in return for better interest rates.

If the buyer, for example, had £10m worth of assets under management with the bank, the lender may offer a so-called Lombard loan of £7m. This could mean a smaller upfront deposit is needed, while taking the total loan for the property to £74.6million at 71.7 per cent LTV. Interest rates at these levels are favourable, with 1.5 per cent levied on the mortgage and just 0.7 per cent on the Lombard loan. Based on these sums, the buyer in question could expect a monthly repayment of around £88,583. A mortgage bill big enough to fund a deposit on the average UK home is within the realms of astronomical for the majority of us. But for the buyer of a £100m mansion, it’s no doubt a digestible and attractive deal.

How can Enness help you?

Enness can provide creative solutions for sophisticated financial profiles that don’t fit the tick box lending structure. With access to a myriad of lenders, clientele investing in these types of properties demand the bespoke approach offered by Enness. To find out how Enness Global can help you with your mortgage requirements call an expert now or get in touch below.